Asia-Pacific investors are rebalancing away from the United States and re-engaging with European markets, according to a new study.

More than half of respondents believe that Europe now offers some of the best long-term investment opportunities, with particularly strong conviction from investors in Australia and Hong Kong, BNP Paribas Asset Management ( BNPP AM ) says in the report, Europe Rising: The 2025 Asia Pacific Investor Pulse.

The study was based on a survey of 300 professional investors, including institutional investors, fund selectors, investment consultants, and private banking advisors, across four key APAC markets – Australia, Japan, Hong Kong and Singapore – in August and September 2025.

Three in four respondents ( 74% ) already hold more than 11% of their portfolios in European assets, and 76% plan to increase their allocations over the next 12 months. Among the markets where investors show the strongest intent to increase exposure significantly, Australia ( 87% ) leads the pack – followed by Hong Kong ( 83% ) and Singapore ( 80% ) – with 60% of respondents citing Europe as a more attractive “investment destination” than the US.

Public investment 

Underpinning this optimism is a shift in fiscal posture, according to the study. Europe is entering a new era of strategic public investment, led by Germany’s €500 billion ( US$574.21 billion ) commitment to infrastructure and defence. This forms part of a broader regional trend towards reindustrialization and energy transition, which is actively reshaping Europe’s long-term economic outlook.

Notably, 80% of respondents believe that the EU’s fiscal expansion initiatives will enhance Europe’s long-term competitiveness. Furthermore, 80% of respondents agreed that European companies delivered solid performance in the first half of 2025 and will continue to do so.

More than half of respondents across the four APAC markets believe Europe now offers some of the best long-term investment opportunities, with 38% of the respondents citing attractive valuation as the reason.

“After years of US equity dominance, Europe is re-entering the global spotlight – not as a cyclical trade, but as a structurally redefined investment destination,” says Mike Nikou, BNPP AM’s chief executive officer for Asia-Pacific. “Against a backdrop of attractive valuations, monetary policy clarity, and strategic public spending, European markets are being reassessed by professional investors across Asia-Pacific.”

Policy clarity  

In a global environment marked by inflation volatility, policy divergence, and yield compression, European fixed income is emerging as a source of stability and opportunity.

According to the survey, 71% of investors across APAC agreed that Europe’s investment outlook has become more positive over the past 12 months, driven largely by macroeconomic and policy stability, particularly the European Central Bank’s inflation-fighting credibility and operational independence.

Investment-grade corporate bonds continue to be in strong demand. They rank as the second most preferred product among APAC investors for accessing the European market, reflecting their role as a core allocation in diversified income strategies.

At the more specialized end of the spectrum, private credit is experiencing notable momentum – with 67% of the respondents indicating that they plan to increase their allocation to European private credit, making it the most favoured region for expansion in this asset class.

Investors in Hong Kong are especially optimistic, citing improved access to high-quality private credit products as the reason, while mandate evolution remains the primary driver for increased allocation across the region ( 54% ).

Strong optimism 

Professional investors are optimistic about achieving positive investment returns in 2025, with 40% of the respondents expecting to achieve 5-9%; and 38% expecting to achieve above 10%. In terms of expected returns across asset classes, respondents are generally optimistic, expressing the most confidence in gaining better investment returns from developed markets equities ( 77% ), precious metals ( 77% ), private equities – funds ( 76% ) and real estate ( 76% ), compared to the start of 2025.

APAC investors maintain a strong sense of optimism and strategic clarity. Among those surveyed, 71% are targeting portfolio returns between 5% and 14%, reflecting confidence grounded in well-defined investment goals and thoughtful asset allocation strategies.

The changing market landscape has prompted investors to re-examine their playbook. While passive investment strategies proved to be attractive in the previous low-interest rate environment, in the current situation marked by ongoing market concentration, 83% of the respondents believe that active management is increasingly important in identifying opportunities and managing risks with agility. This belief is particularly strong in Australia, with an overwhelming majority ( 93% ) of respondents agreeing with this statement.